U.S. Net International Investment Position: End of the Fourth Quarter and Year 2013

Comprehensive Restructuring of the U.S. International Economic Accounts

On June 30, 2014, BEA will release "U.S. Net International Investment Position: End of the
First Quarter 2014, Year 2013, and Annual Revisions." The statistics will be
revised to reflect newly available and more complete source data, changes in
estimation methods, and changes in definitions and classifications.

BEA will also introduce a new presentation of the IIP statistics as part of a comprehensive
restructuring of BEA's international economic accounts. This change in presentation, combined
with changes in definitions and classifications, will bring the statistics into closer
alignment with international guidelines. Additional information on BEA's comprehensive
restructuring of the international accounts is published in the March 2014 issue of the
Survey of Current Business. Table templates for the restructured presentation are available on
the BEA Web site at www.bea.gov/international/modern.htm.

Fourth Quarter

The U.S. net international investment position at the end of the fourth quarter of 2013
was -$4,577.5 billion (preliminary) as the value of foreign investments in the United States
exceeded the value of U.S. investments abroad (table 1). At the end of the
third quarter, the net position was -$4,171.8 billion (revised). The $405.7 billion decrease
in the net position reflected a $777.8 billion increase in the value of foreign-owned assets
in the United States that exceeded a $372.1 billion increase in the value of U.S.-owned assets
abroad.

The U.S. net international investment position decreased 9.7 percent in the fourth
quarter, compared with a 6.4-percent increase in the third quarter and an average quarterly
decrease of 6.3 percent from the first quarter of 2011 through the third quarter of 2013. The
net position was equal to 2.4 percent of the value of all U.S. financial assets at the end of
the fourth quarter, up from 2.2 percent at the end of the third quarter.1

U.S.-owned assetsabroad were $21,963.8 billion at the end of the fourth quarter
compared with $21,591.7 billion at the end of the third quarter. The $372.1 billion increase
reflected a $318.4 billion increase in the value of U.S.-owned assets abroad excluding financial
derivatives and a $53.7 billion increase in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $19,148.7 billion at the
end of the fourth quarter compared with $18,830.2 billion at the end of the third quarter.
The $318.4 billion increase reflected a $196.4 billion increase resulting from valuation
changes and a $122.1 billion increase resulting from financial outflows.2 Valuation changes
were mainly attributable to an increase in foreign stock prices that raised the value of U.S.
holdings of foreign stocks.

Foreign-owned assets in the United States were $26,541.3 billion at the end of the
fourth quarter compared with $25,763.5 billion at the end of the third quarter. The $777.8
billion increase reflected a $749.3 billion increase in the value of foreign-owned assets in
the United States excluding financial derivatives and a $28.5 billion increase in the value of
financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $23,799.4
billion at the end of the fourth quarter compared with $23,050.0 billion at the end of the
third quarter. The $749.3 billion increase reflected a $430.6 billion increase resulting from
valuation changes and a $318.8 billion increase resulting from financial inflows. Valuation
changes were mostly attributable to increases in U.S. stock prices that raised the value of
foreign holdings of U.S. stocks. The rise in the value of U.S. stocks was partly offset by
declines in the value of U.S. debt securities due to falling bond prices.

Revisions

The U.S. net international investment position at the end of the third quarter of 2013
was revised to -$4,171.8 billion from a previously-published value of -$4,165.6 billion. The
$6.2 billion downward revision to the net position reflected a $6.9 billion upward revision
to foreign-owned assets in the United States that exceeded a $0.7 billion upward revision to
U.S.-owned assets abroad.

U.S.-owned assets abroad at the end of the third quarter were revised to $21,591.7
billion from $21,590.9 billion, and foreign-owned assets in the United States were revised to
$25,763.5 billion from $25,756.5 billion. These revisions reflect revised source data from
the Treasury International Capital (TIC) reporting system and from BEA’s quarterly surveys of
direct investment.

Year 2013

The U.S. net international investment position was -$4,577.5 billion (preliminary) at
the end of 2013 compared with -$3,863.9 billion at the end of 2012. The $713.6 billion
decrease in the net position reflected a $1,039.8 billion increase in the value of foreign-owned assets in the United States that exceeded a $326.1 billion increase in the value of
U.S.-owned assets abroad. The U.S. net international investment position decreased 18.5
percent from the end 2012 to the end of 2013, compared with a 3.6-percent decrease from
yearend 2011 to yearend 2012.

U.S.-owned assets abroad were $21,963.8 billion at the end of 2013 compared with
$21,637.6 billion at the end of 2012. The $326.1 billion increase reflected a $1,130.8
billion increase in the value of U.S.-owned assets abroad excluding financial derivatives
that was partly offset by an $804.7 billion decrease in the value of financial derivatives.

U.S.-owned assets abroad excluding financial derivatives were $19,148.7 billion at the
end of 2013 compared with $18,017.9 billion at the end of 2012. The $1,130.8 billion increase
reflected a $577.8 billion increase resulting from valuation changes and a $553.0 billion
increase resulting from financial outflows. Valuation changes were mainly attributable to the
increase in foreign stock prices that raised the value of U.S. holdings of foreign stocks.

Foreign-owned assets in the United States were $26,541.3 billion at the end of 2013
compared with $25,501.5 billion at the end of 2012. The $1,039.8 billion increase reflected a
$1,859.8 billion increase in the value of foreign-owned assets in the United States excluding
financial derivatives that was partly offset by an $820.1 billion decrease in the value of
financial derivatives.

Foreign-owned assets in the United States excluding financial derivatives were $23,799.4
billion at the end of 2013 compared with $21,939.5 billion at the end of 2012. The $1,859.8
billion increase reflected a $953.8 billion increase resulting from valuation changes and a
$906.1 billion increase resulting from financial inflows. Valuation changes were mostly
attributable to increases in U.S. stock prices that raised the value of foreign holdings of
U.S. stocks. The rise in the value of U.S. stocks was partly offset by declines in the value
of U.S. debt securities due to falling bond prices.

* * *

Valuing the Components of the U.S. International Investment Position

Investment positions for long-term portfolio securities are based on market values from
monthly, annual, and benchmark surveys conducted by the Treasury International Capital (TIC)
reporting system of the U.S. Department of the Treasury. Investment positions for financial
derivatives are based on fair market values from quarterly surveys conducted by the TIC
reporting system. Investment positions for claims and liabilities reported by banks,
securities brokers, and other nonbanks are based on contractual (face) values of instruments
as reported by financial institutions for both their own accounts and the accounts of their
customers on the monthly and quarterly surveys conducted by the TIC reporting system with
supplementary data for U.S. nonbanks from foreign central banks.

Investment positions for direct investment are valued at current-period prices based on
a revaluation of book values. Book values are reported by U.S. multinational companies on
surveys conducted by BEA. Direct investment at current cost is BEA’s featured measure of
direct investment at current-period prices.3 The current-cost method values the U.S. and
foreign parent shares of their affiliates’ investment in (1) plant and equipment using the
current cost of capital equipment, (2) land using general price indexes, and (3) inventories
using estimates of their replacement cost.4

* * *

Release dates in 2014

End of the Fourth Quarter and Year 2013

March 26, 2014 (Wednesday)

End of the First Quarter of 2014, Year 2013, and Annual Revisions

June 30, 2014 (Monday)

End of the Second Quarter of 2014

September 25, 2014 (Thursday)

End of the Third Quarter of 2014

December 30, 2014 (Tuesday)

BEA’s national, international, regional, and industry statistics; the Survey of Current
Business; and BEA news releases are available without charge at www.bea.gov. At the site, you
can also subscribe to receive free e-mail summaries of BEA releases and announcements.

1 Board of Governors of the Federal Reserve System (FRS), “Table L.5 Total Liabilities and Its
Relation to Total Financial Assets,” in Financial Accounts of the United States, Fourth
Quarter 2013, Z.1. Statistical Release (Washington, DC: FRS, March 6, 2014): 11. According
to the March 6, 2014 Z.1 release, the value of all U.S. financial assets was $193,911.9
billion at the end of the fourth quarter. U.S. assets abroad from the international
investment position were $21,963.8 billion at the end of the fourth quarter, 11.3% of all
U.S. assets, down from 11.4% in the third quarter and down from the 13.5% series peak in
the third quarter of 2011.

2 For statistics on financial flows, see the financial account transactions in table 1 of the U.S. International Transactions Accounts. Financial flows discussed in this release
are not seasonally adjusted. Detailed valuation changes such as price, exchange-rate, and
other changes are available only for annual statistics in the June release.

3 BEA publishes direct investment at market value as an alternative current-period price
measure with owners’ equity revalued using indexes of stock market prices. Beginning with
the June 30, 2014 release, direct investment at market value will be the featured measure
in the U.S net international investment position statistics. BEA also publishes direct
investment at historical cost with owners’ equity at the book value reported on BEA’s
surveys. Country and industry detail for direct investment are available only on a
historical-cost basis (see www.bea.gov/iTable/index_MNC.cfm).